AMD continues to reach new highs, what's the next target? (2024.03.04)

$Advanced Micro Devices(AMD.US)$

Hello everyone, in this week's [Technical Tracking], let's analyze the AI potential stock that has attracted market attention - AMD.$Advanced Micro Devices(AMD.US)$.

$Advanced Micro Devices(AMD.US)$

Hot events

$Advanced Micro Devices(AMD.US)$

AMD's stock price jumped 9% on Thursday (February 29, 2024), and its market cap surpassed the $300 billion mark for the first time! The stock price continued to rise the next day, hitting a new historical high for two consecutive days.

$Advanced Micro Devices(AMD.US)$

AMD can be said to be one of the companies that has made the greatest progress in the US stock market in recent years. If we go back in time five years ago, AMD's market cap ranked only 222nd among the constituents of the S&P 500 Index. Today, this company has achieved a huge leap, rising to 22nd in market cap rankings.

$Advanced Micro Devices(AMD.US)$

Of course, AMD is just a microcosm of the entire semiconductor sector that shines in the capital markets. Citigroup analysts pointed out in their research reports that they are still very optimistic about the semiconductor sector. They emphasized that in the background of the continuous growth of the AI market, industries across the board are actively purchasing AI chips. In Citigroup's view, AMD, Nvidia, and Broadcom are potential stocks in the semiconductor sector.

$Advanced Micro Devices(AMD.US)$

However, AMD's valuation doesn't seem cheap. Currently, AMD's trailing P/E ratio is close to 50 times, much higher than the industry leader Nvidia's 32 times. To some extent, this also reflects investors' high expectations for AMD.

$Advanced Micro Devices(AMD.US)$

According to Bloomberg data, although 3/4 of institutions give AMD a "buy" rating, considering that AMD's stock price has skyrocketed, it has actually reached the average target price given by analysts, which means that the potential upside of the stock may be limited in the future.

$Advanced Micro Devices(AMD.US)$

Technical analysis

$Advanced Micro Devices(AMD.US)$

Overall, AMD's stock price has broken out of a high consolidation range that lasted for about a month with a strong bullish candlestick, followed by a bullish gap to consolidate the bull's victory. Currently, AMD's stock price is at a historical high, with no obvious resistance above, but it may face selling pressure from some investors taking profit.

$Advanced Micro Devices(AMD.US)$

Trend analysis:

$Advanced Micro Devices(AMD.US)$$Advanced Micro Devices(AMD.US)$

1. The current upward trend of AMD started from the low point at the end of October last year. It lasted for about 4 months, and the stock price almost doubled, indicating that the bull firmly controls the situation.

$Advanced Micro Devices(AMD.US)$

2. Starting from the end of January, the stock price entered a sideways consolidation phase, with both the bulls and bears gaining and retreating, and the consolidation process lasted for about a month.

$Advanced Micro Devices(AMD.US)$

3. The stock price finally broke out of the rectangular consolidation range with a strong bullish candlestick, followed by a bullish gap to consolidate the bull's advantage.

$Advanced Micro Devices(AMD.US)$

Indicator interpretation:

$Advanced Micro Devices(AMD.US)$

The daily chart shows that AMD's 20-day, 50-day, and 200-day moving averages have maintained a bullish arrangement for several months, indicating a very positive medium-term uptrend signal. In this trend background, the conservative trading direction is often biased towards long positions.

$Advanced Micro Devices(AMD.US)$$Advanced Micro Devices(AMD.US)$

From a technical perspective, AMD has roughly formed a rectangular consolidation range. According to the general formation theory, after a stock price undergoes a rectangular consolidation, the potential breakout direction is to continue the previous trend, with a target price roughly equal to the height of the rectangle. Currently, the stock price trend conforms to the characteristics of a rectangle formation, and the trading volume is also in line.

$Advanced Micro Devices(AMD.US)$

Focus direction:

$Advanced Micro Devices(AMD.US)$

On one hand, pay attention to whether the stock price will retest the resistance level above the rectangle (near $184); on the other hand, pay attention to whether the stock price will move towards the target price of the rectangle formation (near $207).

$Advanced Micro Devices(AMD.US)$

In addition, since the stock price has reached a historic high, it is difficult to determine the potential resistance level above the stock price using conventional technical analysis methods. In this case, investors can consider using Fibonacci trend extension lines to assist with trading.

$Advanced Micro Devices(AMD.US)$$Advanced Micro Devices(AMD.US)$

This content discusses technical analysis. Other methods, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results.

$Advanced Micro Devices(AMD.US)$

All investment involves risk, including the potential loss of principal, and no investment strategy can guarantee success.